How do Chinese politicians REALLY make their money？

[Touchstone57]

I thought it was a good question and one I have been considered a lot.

I have been told by a few that a civil service career is highly sought after in China, but I often wonder how many civil servants and politicians support the life styles they maintain.

Because of certain family members and people I know, I've managed to meet quite a few myself (all at massive super feasts), and I have learned in China there is a department for everything, literally everything. I can't begin to actually comprehend the size of the Chinese government and its departments. In fact I am not even sure they know themselves.

Every province, city, district, sub district etc has different departments with highly bureaucratic titles for everything you could imagine without any real purpose. My next door neighbours toilet is governed by the Municipal Ministry of Bureaucratic Agricultural Advancement, complete with boss who drives a Porsche, has 9 children all studying at Hardvard in the US, despite being on an annual salary of 70k RMB.

I mean, we know to an extent that they have fingers in many pies, but I am curious at how many of these higher level folks in the government actually make their money, whether is directly from the departments they work for, or from various bribes. I know some folks who work in the Ministry/department of infrastructure in a 3rd tier city, yet the the department is run somewhat like a business and makes profit through securing different projects using tax payers money, so I'm not really sure how that all works.

Was interested what other people think!

[Demian]

Based on my life in India, here´s my top five -

Method one - Institute a big bureaucracy

Bigger a bureaucracy is, more chances there are for a person to get stick somewhere (because he doesn´t have some stupid document) and wriggle out of that situation by paying a bribe to an official.

Big bureaucracy = more chances of making money

Method two - Contracts

Want a road contract? Pay me 10 per cent, and the contract is yours. My duty will be to ensure vigilence bureau (anti-corruption) dogs do not run after you when the rains wash away the road two years from now.

Method three - Posts

Now that everyone knows there are ways to make money in civil services and politics, why not auction some lucrative government posts. This methods works when there are two more more able candidates for a job, but one has the wherewithall to pay bribes. You can sell your own post if you are about to retire.

Method four - Property

You cannot keep your money in banks. Government will get suspicious. So you invest in property, let property prices sprial out of control and make money from it.

Method five - Children

I cannot think of a politician´s child in India who was educated here. Rahul Gandhi, Sukhir Singh Badal, Manpreet´s children are all educated in either the U.K or the U.S. With a foreign education, you have more exposure and more ways to legally and illegally make money.

Do you want me to list more?

[WestTexas]

Do you want me to list more?

Yes! To be honest, as an American, it has been difficult for me to figure out where the money comes from for these government guys. I mean, I get that they take bribes, but the exact mechanics of how bureaucrat X gets enough bribes to buy a car that is worth 20 times the annual salary in the area are puzzling. Where does the money come from?

I live in a small town in China (300k population, small for China). The main industry is farming. There are some shopping places and one factory. Really, just one factory in the whole city. Yet I see Land Cruisers and Audi SUVs everywhere. There seems to be no major industry or way to generate that much cash here, so I don't get where the money comes from. In fact, the vice-president of the town's one factory is a friend of a friend, and he says that the government guys all have a lot more money than he does. How? Where's it come from?

[skylee]

Why is 高薪養廉 (adopted in Singapore and Hong Kong) not viable in Mainland China?

[msittig]

It could be another way -- *embezzlement*. The reason you don't see any development is because money/loans from the central government that were earmarked for development were instead swallowed up by the government officials, with pennies going to the real work.

[tysond]

It's interesting, at first you don't really understand all the angles, but there are a lot of ways bad people can use their position to make money. I don't know much about China but I've seen what happens in other places.

Take police for example. In an unnamed Asian country I once drove past the police car parked under a bridge on a highway, and there was a mountain of cash on the front of the car, and 4-5 officers around it. They had just finished a shift of work and were dividing up the bribes that had been collected. In this case the cash came from people who break the speed limit. They pay $20 to avoid a $100 fine, and as a bonus the cop will tell them the locations of the next few police units along that highway so they don't have to pay twice for one trip (given this level of customer services you already know this story is not about China). They worked a system and sometimes had cars lined up the road 5-10 at a time and would go from car to car collecting cash.

Now at first, I thought this mountain of cash was just divided among the guys doing the work (the guy with the speed camera, the guy waving people off the road, the guy who threatens to write tickets). But it's not like the guys back in the office are unaware of what is going on. The guy who schedules rosters and assignments makes a big cut - without him, you'll be patrolling for street crime, or chasing bank robbers, instead of collecting bribes from people in BMWs. And whoever gave the scheduling guy his job - he gets a cut too - that scheduling job is a sweet deal and you can make a lot of money doing it. In fact, it's quite possible he paid up front to get that job (like Demain said).

Another way is more to do with projects - construction for example. Contracts get won by big firms, who need small firms to do all the work. Big firms know the deal. When those small firms are selected, somehow it's always the official's relative's company that gets a juicy subcontract for some reason, despite being a shelf company with no capital, office, staff, track record or whatever. Then they subcontract that work out to another company who actually does it. Or sometimes, doesn't even bother doing it at all.

That's why some Asian countries love having rules & policies restricting projects to be awarded to local companies (for national security/economic reasons of course). Keeps the pesky international firms with their rules and policies and paper trails out of the picture until the work actually has to be done further down the chain.

[淨土極樂]

It really seems like you're describing Russia.

[Johnny20270]

Happens in a lot of places. I was on a Greek island one time and two fat Greek cop turned up with a fold out chair, asked all tourist for €10 as a 'port tax'. Total cr#p but we all paid. funny how all of the locals had to pay

With advent of phone cameras and you tube, its stamping out a lot of this in more developed countries

These things happen in London too. Lots of idiot estate agents, keep overseas students deposits on apartments (unknown by the landlord) because they know the students, especially Asian ones won't kick up a big fuss and are leaving the country. Disgusting

Regarding companies and brides in China, its a big problem for US investment banks setting up operations in China. As 'gifts', preferential employment to politicians relatives, favouritism in awarding of contracts are not uncommon, US banks need to thread careful as they are governed by US regulations and sanctions, irrespective of where the geographical location is. The US regulatory bodies are prudent in checks and have little sympathy in deviation from the rules. Same for European (well EU) banks.

[Angelina]

Isn't Greece a developed country? Taking bribes is not the worst thing their police force is doing on a daily basis...

China is not the only country where corruption is common practice. Maybe it's more obvious because of the size of the Chinese economy and thus the large quantities of money involved.

[jeswon]

I have lived in China for many years. Maybe I can explain why the civil servants have a lot of money. The reason is that the have power, even a little power can make unlimited money in china. because no one can say no to the officals. the people have no votes no rights to decide who rule them. For example, in a some country town in the poor northwest of china, a small staff in the education bureau can get many bribes by new graduates getting the teacher post or the remote rural teacher changing work in the county town, the graduates or the rural teacher must afford a whole family's savings even borrow money from friends and bank to gather together the enough money to bribe the official. So a small official in a undeveloped remote town can drive LandRover, even can offord the kids to study in foreigh universitis. In a word, power can make money, whatever it is powerful or not, because It can gather many people many families wealth, year after year. Do you understand?

[skylee]

Anyone interested in my question at #4?

[tysond]

Regarding 高薪养廉 --> my thinking is all this does is remove the excuse "I have to take bribes because my salary is so low". The legality of the bribery is still the same, but I guess the culture of acceptance may be a bit different. But even if you increase the salaries, it's really up to enforcement/reporting/whistleblowers to make it work.

Interesting, both Singapore and Hong Kong inherited largely British judicial and policing systems - perhaps their ability to get it enforced was stronger on day one. But that doesn't explain Malaysia. So perhaps somehow their interest to get it enforced was higher.

When I was living in Singapore the locals would joke "In Singapore you still have to pay the government to get anything done. It's just that you get a receipt" (in other words, you pay at the office a standard rate as a processing fee, which is quite true -- you can get many things done in a few hours if you pay an express processing fee).

[skylee]

I think for 高薪養廉 to work one of the basic concepts has to be established, ie that govt officials are not 官 but public servants (公僕 ) --In HK, except the Chief Executive and Judges the word 官 is not used in official titles, unlike in the Mainland where mere company CEOs call themselves 官 -- And it will also require the support of sets of system, like a viable official remuneration system, a viable disciplinary system to monitor and remove/penalise officials, a workable anti-corruption system with a supporting education system, etc. China and many other countries might just lack the will or means or the intention to operate in such an environment.

PS - and I always wonder if something works in HK and Singapore because they are small. Is size a factor? But surely there are other countries with relatively less corruption. Can't China learn from them?

[fanglu]

But surely there are other countries with relatively less corruption. Can't China learn from them?

I don't think corruption is widespread in China for lack of models for dealing with corruption. It's because when absolutely everyone who works for the government is corrupt to some extent, there is no political support for measures that would really stop corruption.

When a system is full of corrupt people, its extremely difficult to get to a position of power without yourself being corrupt. If I am known to be trying to rise up the ranks while remaining totally clean, everyone around me will assume that when I get into power I will punish those who are corrupt, and so do everything they can to stop me gaining any measure of power. So, only the corrupt are capable of gaining power, and they are hardly likely to want to change the system that has been so good to them. That is why reform is so difficult.

The way to short-circuit this kind of systematic corruption is to bring in people from outside the system and give them a lot of power. The way most countries do this is through elections. That option, obviously, is not available in China.

[Angelina]

My country is even smaller than Hong Kong, but has mainland-style corruption. Size isn't a factor.

We also have elections. Makes no difference. Did I mention our record-breaking unemployment rate?

[Kobo-Daishi]

Interesting, both Singapore and Hong Kong inherited largely British judicial and policing systems - perhaps their ability to get it enforced was stronger on day one. But that doesn't explain Malaysia. So perhaps somehow their interest to get it enforced was higher.

Not to mention India.

So a small official in a undeveloped remote town can drive LandRover, even can offord the kids to study in foreigh universitis.

I wonder if corrupt Indian officials drive Land Rovers.

Probably not. Since Land Rover is owned by an Indian company, they probably consider it a domestic car and no corrupt official worth his salt would be seen driving domestic. Not prestigious enough.

Kobo.

[skylee]

Re #14, this is true. This was probably why after an anti-corruption agency was set up in HK in the 1970's a patrial amnesty order was issued.

[heartofthematter2013]

seriously, i don't see china as having a sustainable stable society let alone an advanced nation.

corruption seems too extreme and out of control in china. hk is a democracy, i beleive from last i checked on it, its still safer than mainland. there are different signs to this. i think i read a report like about mainlanders flocking to hk to buy baby formula and hk reacted by enacting quota per person to avoid having a shortage.

democrazy just guarantee a more just, ethical, sustainable society, but there are success examples. on the other hand,there has never been an example of communism working.

there are telltale signs china on the verge of collapse. serious issues include environmental, food, social, political areas.

even china civilians don't trust their food manufacturer and buy from foreign source if possible.

so how can a nation be sustainable let alone evolve if the most basic needs like healthy environment and food are poisoing it. its like commiting suicide.

[rezaf]

@west Texas: Local bribes are not their only source of income. The central government gives lots of subsidies to undeveloped areas.

[xiaocai]

My next door neighbours toilet is governed by the Municipal Ministry of Bureaucratic Agricultural Advancement, complete with boss who drives a Porsche, has 9 children all studying at Hardvard in the US, despite being on an annual salary of 70k RMB.

please name this person. It sounds quite interesting and as a Chinese citizen I'd really like to know. And the 9 children studying at Harvard, too.